|Pub. 3991, Highlights of the Job Creation and Worker Assistance Act of 2002
||2007 Tax Year
Tax Changes for Individuals
New 5-Year Carryback Rule for
Net Operating Losses (NOLs)
If you have an NOL from a tax year ending during 2001 or 2002, you must generally carry back the entire amount of the NOL
to the 5 tax years before
the NOL year (the carryback period). However, you can still choose to use the previous carryback period. You also can choose
not to carry back an NOL
and only carry it forward.
Individuals, estates, and trusts can file Form 1045, Application for Tentative Refund. The instructions for this form will be
revised to reflect the new law.
Wash Sale Rules Do Not Apply to Section 1256 Contracts
The wash sale rules that generally apply to losses from the sale of stock or securities, do not apply to any loss arising
from a section 1256
A section 1256 contract is any:
Regulated futures contract,
Foreign currency contract,
Dealer equity option, or
Dealer securities futures contract.
Wash sales and section 1256 contracts are explained in detail in Publication 550, Investment Income and Expenses.
Other changes are discussed in the following chapters.
Deduction for Educator Expenses
If you are an eligible educator, you can deduct as an adjustment to income up to $250 in qualified expenses. You can deduct
these expenses even if
you do not itemize deductions on Schedule A (Form 1040). This adjustment to income is for expenses paid or incurred in tax
years beginning during 2002
or 2003. Previously, these expenses were deductible only as a miscellaneous itemized deduction subject to the 2% of adjusted
gross income limit.
You are an eligible educator if, for the tax year, you meet the following requirements.
You are a kindergarten through grade 12:
You work at least 900 hours during a school year in a school that provides elementary or secondary education, as determined
These are unreimbursed expenses you paid or incurred for books, supplies, computer equipment (including related software
and services), other
equipment, and supplementary materials that you use in the classroom. For courses in health and physical education, expenses
for supplies are
qualified expenses only if they are related to athletics.
To be deductible as an adjustment to income, the qualified expenses must be more than the following amounts for the
The interest on qualified U.S. savings bonds that you excluded from income because you paid qualified higher education expenses,
Any distribution from a qualified tuition program that you excluded from income, or
Any tax-free withdrawals from your Coverdell education savings account.
Personal Credits Still Allowed Against Alternative Minimum Tax
The provision that allowed certain nonrefundable personal credits to reduce both your regular tax and any alternative minimum
tax (AMT) has been
extended and will be in effect for 2002 and 2003. This provision, as it applies to the AMT, was originally scheduled to expire
after 2001. Without the
extension, these credits could not have been used to reduce any AMT in 2002 or 2003.
Child and Dependent Care Expenses
For the purpose of figuring the child and dependent care credit, your spouse is treated as having at least a minimum amount
of earned income for
any month that he or she is a full-time student or not able to care for himself or herself. Beginning in 2003, this amount
is increased to $250 a
month if there is one qualifying person and to $500 a month if there are two or more qualifying persons. Before 2003, the
amounts were $200 and $400.
The same rule applies for the exclusion of employer-provided dependent care benefits. For more information about the credit
and exclusion, see
Publication 503, Child and Dependent Care Expenses.
Previous | Index | Next
Publications Index | 2007 Tax Help Archives | Tax Help Archives Main | Home